Central America

HL Deb 26 April 1999 vol 600 cc81-96

7.40 p.m.

Viscount Montgomery of Alamein rose to ask Her Majesty's Government what steps have been taken to facilitate economic recovery in the recently devastated republics of Central America.

The noble Viscount said: My Lords, in asking this Unmarred Question, to which I have no right of reply, I wish to express my gratitude to all noble Lords who will speak in the debate. I am particularly glad that the noble Baroness, Lady Richardson of Calow, will make her maiden speech. It is most encouraging to welcome a new member to what I loosely call the "Latin American fraternity" in the House, which is always in dire need of new members. On this occasion the noble Baroness is to be followed by the right reverend Prelate the Bishop of Blackburn, which is an encouraging sign.

Noble Lords will remember that on 10th December we debated this subject, but at that time we were debating the immediate relief in the aftermath of Hurricane Mitch. Her Majesty's Government are to be commended on their rapid reaction to the hurricane. We are all extremely grateful to the noble Baroness, Lady Amos, for the action taken by herself and her department in bringing that immediate relief. But tonight we are concerned more with the longer term economic recovery of this devastated region. Honduras and Nicaragua were victims of massive levels of destruction; El Salvador and Guatemala inevitably to a lesser extent, but they also suffered.

The infrastructure in Honduras and Nicaragua was severely damaged—roads, bridges and schools were wiped out. But perhaps more crucially in the longer term, their agriculture, upon which their exports depend, was largely wiped out. For instance, in Honduras, the banana, coffee, shrimp and melon industries were destroyed and the sugar industry was badly damaged. The same applies in Nicaragua and to a lesser extent in Guatemala, where 70 per cent of the banana plantations were wiped out and thousands of hectares of coffee, fruit and vegetable crops were ruined. Those are serious matters from which it will take a long time to recover.

I have mentioned bananas in connection with two countries. As an aside, perhaps I may mention that we have debated the subject in the House for many years. I fear that the noble Baroness, Lady Amos, will not agree with me when I draw some satisfaction from the WTO ruling that the EU was out of order for subsidising its former colonial powers to the disadvantage of Latin American producers, which are also developing countries and will increasingly need to export these crops if they are to survive. That is an aside and I do not expect the noble Baroness to agree or to comment because that is not the main thrust of today's debate, which concerns economic recovery in Central. America.

It is gratifying that the Department for International Development has had a team in Central America which has made a study and shown that things such as safe water and health are key areas about which we can do something. I wonder whether it would be possible for the United Kingdom to take responsibility for specific projects, which could be attached to our name, such as the rebuilding of a school or a series of bridges. Specific projects in kind often prove much better and much more effective than donations in cash which sometimes are dissipated in the process of being utilised.

An important subject in the longer term is debt relief in the area. Because of their history, these countries are obviously heavily indebted. I am sure that several speakers will refer to that. The subject was not cove red in detail in the December debate because we were then concentrating on the matter of immediate relief. All Central American countries are more or less in the same position, but obviously the impact is in direct proportion to the damage caused to their respective economies and their export potential. As the exports of Central America are largely agricultural, trade surpluses will be very low and in some cases non-existent. That is likely to continue for some years.

Clearly, the Inter American Development Bank and the World Bank will have to play a major part in this matter. Whatever we in Europe may feel about it, the most important trading partner for Central America is the United States of America. It is the major power player in the area and has the most influence and the most trade. But Europe has a role to play in general, particularly in the context of the EU, and possibly of Britain in particular. I hope that we can see our way forward to developing that role.

Central American countries generally have favourable climatic and soil conditions except, obviously, in the case of major natural disasters. The people of Central America are hard working and talented. They have natural entrepreneurial and other skills. I can say that with some authority. I am probably the only Peer who has lived for some years in El Salvador. During that time I visited all these countries and got to know their peoples very well. The region is worthy of our continued support. I hope that we can provide it.

7.45 p.m.

Baroness Richardson of Calow

My Lords, I am very conscious of the privilege of sitting in your Lordships' House and, from now on, of speaking in it. I am grateful for the unfailing courtesies I have so far received and for the help that so many people have given me. I hope that that help continues for a few weeks yet. I ask for your Lordships' indulgence if I inadvertently transgress the codes of courtesy with which I am not yet very familiar and also if I repeat points already made by the noble Viscount.

I am not an economist. I speak now partly because I have a concern for the people of Central America. I am an ordained minister of the Methodist Church and I currently have the responsibility for all our world church partnerships. The Methodist Church in its missionary endeavour reaches many parts of the world. Although most of our partnership churches are now autonomous, we still have very great links of personal friendship. We share our personnel across countries and also give aid in financial resources. I also have responsibility in the Methodist Church for our Methodist Relief and Development Fund. We also have a number of ecumenical partnerships which enable us to reach areas such as Central America which are not normally Methodist areas.

I wish to make three points. First, I wish to refer to debt relief. There is a general agreement that one of the most critical factors in economic recovery is the debt burden. I warmly commend Her Majesty's Government on their response to the emergency in the aftermath of Hurricane Mitch. Three million pounds has been spent on emergency and reconstruction aid since last November, £6 million has been promised for medium-term rehabilitation in Central America, and a significant contribution has been promised to the European Union's fund for relief.

I am also grateful that Britain took the lead in calling on the World Bank to set up a trust fund to service multilateral debts and made a contribution of £10 million to that fund. However, I understand that the moratorium on debt payments, which was declared in December by the Paris Club of creditor nations, relates only to the next two or three years and that the interest incurred will be added to the debt burden after that time. It also seems that this agreement was made without the representatives of Nicaragua and Honduras being present at the meeting. I suggest that rehabilitation and reconstruction will take much longer than three years and perhaps longer than 20. When the Minister replies, perhaps she would like to make reference to the Government's position.

As to development aid, it was felt by some agencies at work in Central America that the coverage given by the British media after the disaster gave the impression—I quote from a letter from a local Nicaraguan non-governmental organisation to the Methodist Relief and Development Fund office—that Nicaraguans were entirely helpless and disorganised, begging for handouts and calling for international handouts and calling for international experts to save them". In fact there are significant networks of community workers and agencies in those countries, well set up to deal with the crises that affect that part of the world. The hurricane was a major disaster and meant that those agencies diverted their resources to dealing with immediate needs of shelter, food and trauma care. Their material resources are stretched now but the expertise, energy and creative leadership are in place for community development.

Aid is not only government-to-government but people-to-people. The response by the ordinary people in Britain has been very good. I am grateful to the Government for their announcement of the gift aid scheme to bolster individual donations to charities at work in poorer countries. I would be grateful for confirmation that the scheme will cover donations to agencies at work in Central America.

My third point is made by way of personal anecdote. I was visiting El Salvador on behalf of Christian Aid when we were taken to a remote community, where returning refugees had been given a small parcel of unproductive land. They were scratching a living from it and were very poor. As we left we asked whether there was one thing that was in our capabilities to give them that would help their work in the village. We expected to be asked for agricultural implements, building materials or school books. In fact, it was a ping-pong table. Talk of economic recovery is not only about balance sheets, investment returns, company profits and government debts. It is about enabling individuals to have a quality of life that includes meeting basic human needs, freedom from fear and occasional laughter. It is also about enabling communities to support and strengthen individuals.

7.52 p.m.

The Lord Bishop of Blackburn

My Lords, it gives me the greatest pleasure on behalf of the whole House to offer our congratulations to the noble Baroness, Lady Richardson of Calow, on her maiden speech. The noble Baroness has had a distinguished Christian ministry in the Methodist Church, to which she has referred, and beyond that in the ecumenical movement among the Churches. She is a notable pioneer in the Methodist Church.

The noble Baroness is a veritable collector of firsts. When she and I lived in adjoining streets in Rastrick, in West Yorkshire, she was the first woman chair of a Methodist district. She went on to be the first woman president of the Methodist Conference, first woman moderator of the Free Church Council and the first woman to be president of the Churches Together in England. Your Lordships will understand that there was widespread delight among the Churches when she became the first woman Free Church minister to be made a Peer. Tonight is a unique occasion in every sense. We all look forward to hearing more of her experience, wisdom and anecdotes on future occasions.

I am most grateful to the noble Viscount, Lord Montgomery of Alamein, for enabling the House to have this short debate on an important matter. There is a real danger that, as the world rightly focuses its attention on the dreadful situation in the Balkans, the continuing needs following the devastation wrought by Hurricane Mitch on Central America will be overlooked. The situation remains perilous in a number of countries, even though the immediate crisis is over. In Honduras, the combination of structural weakness and the sheer volume of water had a devastating effect and whole communities have now to be re-established. So great was the damage caused by the hurricane that cartographers are redrawing the map of that country.

One in four people have no prospect of work for the foreseeable future. It is not surprising that immigration officials in Mexico and the United States are expelling increasing numbers of immigrants from Central American states. Further heavy rain in the north last January only served to exacerbate the problem and made rebuilding difficult. The beginning of the rainy season next month could well trigger new flooding and further landslides. The United Nations World Food Organisation has warned that Honduras does not have enough grain to feed the nation and is predicting a further food crisis this year.

It is good to report that the Churches, through Christian Aid and other aid agencies, have been actively involved in providing emergency relief and are continuing to try to stimulate the economic and social recovery in the region about which the noble Viscount spoke. Christian Aid, for example, is trying to ensure that reconstruction takes into account the need to manage better natural resources and the environment, provide much-needed training in basic healthcare, create measures that will deal more effectively with natural disasters in future, and be concerned about the needs of women, children and the elderly. Even with all that, there is a growing consensus among aid agencies that policies aimed at stimulating economic growth must seek also to narrow the gap in social inequality that is perpetuated through structural financial discrimination.

Although Christian Aid has partner links with the Christian Commission for Development in Honduras—working on the ground and helping to reconstruct houses and rehabilitate health services in affected areas—the Church of England here, as a member of the Jubilee 2000 Coalition, has been trying to focus attention on the underlying issue of debt as a barrier to economic and social development in the affected states that is so much needed. As the Honduran ambassador to the United Kingdom pointed out: Honduras has no revenue to pay for both its debts and its reconstruction, not because of bad policies or because it does not wish to, but because that capacity was mortally crushed by a, force majeure". The disaster means that the debt has become a noose around the nation's neck that is slowly being pulled more tightly.

Last year's Lambeth Conference of bishops from the worldwide Anglican communion—many of whom have first hand experience to bring to our debates—called in a considered resolution for debt remission. This month, the Roman Catholic bishops of England, Wales and Scotland made a similar call. They rightly stated that the remission of unpayable debt of the world's most indebted countries was no longer an impossible ideal but a practical necessity". That is certainly the case in the Central American region. Honduras and Nicaragua together owe more than 10.2 billion dollars. I hope that the Government, who I know have done so much, will address that issue and feel able to follow the example set by other European nations. Finland has recently written off 18 million dollars owed by Nicaragua. France and Spain have unilaterally written off the debt of affected countries. It seems that those nations need more than the three-year moratorium on loan repayments offered by the Paris Club. To many, that seems but a stay of execution rather than a serious determination to resolve the debt burden facing the region.

When the Minister replies, I hope that she will assure the House that the matter will be raised by our government at the G8 summit in Cologne. It needs concentrated international effort to encourage progressive reconstruction. I am sure that the Government will do all they can to play a full part in helping to achieve that.

7.58 p.m.

Lord Desai

My Lords, I thank the noble Viscount, Lord Montgomery, for introducing this important question, and we heard an excellent maiden speech from the noble Baroness, Lady Richardson of Calow. Unlike them or the right reverend Prelate, I do not bring any practical experience of relief work or development aid, but I want to make some general points. While we are very good at relief, we must now think in terms of recovery and development. We must think in terms of a different timescale and in different depth.

It is interesting that if a country falls into financial crisis as a result of bad bank lending, billions of dollars are found for that country, as we saw during the Asian crisis. I believe that a sum of 54 billion dollars was found for Korea following misbehaviour on the part of banks. Other large sums of money have been found for Mexico, Indonesia, and so on. It is peculiar to forgive, as it were, errors of commission, whereas, when countries have been visited by natural disaster of a great order about which they can do nothing, we have not found swift and generous ways of recompensing those countries for the cost of development.

Another aspect is that some argue that, owing to global warming, our weather is becoming more variable and we are subject to natural disasters with greater frequency than we have been used to. I agree with that view. If that is the case, we ought to take the Central American experience as a test case, and use it as a learning device to set up long-run generous permanent funding facilities for dealing with future disasters. The noble Viscount mentioned the World Bank and IADB. The UNDP should play a part. Wherever natural disasters occur we must have a double strategy: first of all, immediate relief, but then generous development aid to help with reconstruction. It has been done following wars and bad bank lending; but somehow we are unable to do it following a natural disaster. That lacuna should be filled.

Given that the Government have done such good work in development aid, both in terms of relief and in tackling debt, I urge my noble friend on the Front Bench to take up this call. It is not a question that requires an immediate answer, but we could take the initiative and state that this kind of fund should be set up; and we should begin with Central America as a test case. It is complex region, mainly agricultural. We could learn a large number of lessons in how to reconstruct economies.

Perhaps I may make a marginal reference to the noble Viscount's remarks about the WTO. I do not want to be involved in controversy, but I agree with him. It will be proved that no one will listen to him once I agree with him! These countries should not be reconstructed as they were; they should be diversified to some extent. We must grasp the opportunity to diversify many of the economies that have been over-dependent on a small number of crops such as coffee and bananas. In the course of reconstruction we should apply a diversification strategy, which would be good for growth.

Finally, I turn to a problem that was mentioned by the noble Baroness in her excellent maiden speech. Women frequently bear the excess burden of adjustment. Men may migrate; women stay behind and have to cope. Whatever strategy is adopted for recovery and the reconstruction of economies should be gender sensitive. It must look after the needs and responsibilities that women have to bear in that respect. I do not say that as a cliché. I refer, for example, to setting up lending facilities, work schemes, clean water and health facilities, education, or whatever. The prime focus should be on gender. That is also a good long-term development strategy.

I have spoken more about the long-term than the short-term strategy. I entirely agree with the remarks made by the right reverend Prelate in relation to debt. The large amount of private debt that Latin American and other countries had in the 1980s was "forgiven" by the market; it was equitised, and very often countries paid 10 cents in the dollar. The difficulty is that we cannot seem to forgive public debt. That is a paradox. When the market is more generous about debt forgiveness than governments, something must be wrong somewhere.

8.5 p.m.

Lord St. John of Bletso

My Lords, with world media attention currently focused on the plight of the Kosovar refugees and the uncertain future of the Balkans, it is opportune that the noble Viscount, Lord Montgomery of Alamein, has again given us the opportunity to draw attention to the plight of the devastated republics of Central America less than six months after Hurricane Mitch blew devastation through the region, leaving almost 19,000 men, women and children dead and missing and more than 5 billion dollars'-worth of economic damage. It was perhaps fate that Honduras and Nicaragua, two of the poorest countries in the western hemisphere, should have been the worst affected by the disaster. I wish to devote the few minutes available to me to those two countries.

In the debate introduced by the noble Viscount, Lord Montgomery, in the aftermath of the hurricane last year, three key issues arose. I refer first to the devastating effects on the agricultural sector as well as on the basic infrastructure of roads, rail, bridges and communications. The second was the question of debt relief, a vital issue in today's debate. Debt is effectively crippling the economic growth of many countries in the region. Finally, many noble Lords spoke about the measures taken by the international community to provide not merely short-term relief but sustainable reconstruction in the recovery of the region.

Clearly, apart from the huge international response, the private sector and NGOs have played an important role in efforts to restore stability and help recovery. It is encouraging to read and to hear from several noble Lords, particularly the noble Viscount, Lord Montgomery, who has visited the region, that there are signs of progress, in particular the repair of many important bridges and the fact that most areas now have clean running water. Apart from devastation to the agricultural sector, the basic challenge remains to provide long-term housing for the many thousands of families who remain without a home or a future. Her Majesty's Government have played an important role in providing financial assistance for the programme of rebuilding secondary roads and bridges, repairing water and sanitation infrastructure and restoring health and education services.

The key question posed in the wording of the Question is: what necessary action will be taken to facilitate long-term economic recovery in the worst affected regions? The noble Lord. Lord Redesdale, speaking in the previous debate on this subject, stressed the need for long-term sustainable economic recovery beyond merely restoring the devastated countries to the pre-Hurricane Mitch status quo. We all certainly welcome the announcement last month by the Paris Club to cut part of Honduras' debt service obligations by two-thirds and to defer all debt service payments until 2001.

Agreement with the International Monetary Fund on a three-year package of structural adjustment measures has given Honduras the chance of entry into a further plan to reduce the amount it owes to multilateral creditors. Damage in Honduras is estimated to be about three-quarters of its GDP. The finance minister was recently quoted as saying: I hope we can recover in 7 to 10 years—if we get private sector investment coming in, if we get trade benefits from the US, and if we get resources for reconstruction". The stress is on "hope" and "ifs". Forecasts are that the Honduran economy will shrink to about 2 per cent this year and that growth in Nicaragua will be about 1 per cent. With the agricultural sector being the mainstay of the exports of both countries, large inflows of foreign aid will be needed to plug holes in their balance of payments.

An issue which has not been raised this evening is that of privatisation. Privatisation has played, and will continue to play, an important part in boosting reconstruction funds. Direct investment in the region in 1998 accounted for almost 2.8 billion dollars through privatisation alone. Both El Salvador and Guatemala have put their telecoms and power distribution sectors into private hands, creating a healthy cushion of foreign reserves.

The United States Government have recently launched a large second-phase aid package of almost 1 billion dollars for the hurricane relief programme. It is to be hoped that there will not be lengthy delays in Congress in the implementation of the programme.

My noble friend Lady Richardson of Calow, in her excellent maiden speech, referred to the recently established World Bank multilateral trust fund to help service debts of the worst affected areas. Can the Minister elaborate on the contribution that Her Majesty's Government have made to that fund and their plans to give to it in the future?

In conclusion, despite the laudable international relief efforts for the worst casualties of Hurricane Mitch, there is no doubt that life remains extremely precarious for many in the region. With the rainy season expected next month, there is much concern about future flooding. This year will be another exceptionally tough period as Honduras and Nicaragua continue the slow process of rebuilding their shattered economies.

8.12 p.m.

Lord Redesdale

My Lords, I, too, start by thanking the noble Viscount, Lord Montgomery, for initiating this debate. It seems that, because of his great expertise in the area, he initiates almost all our debates on South America. It is also a great privilege to welcome a maiden speaker. I very much hope that the noble Baroness will join us in many international debates. It is a small, happy and select band which usually takes part in debates on these issues.

The horror of Hurricane Mitch had a massive impact on the media at the time, although it was interesting to see how quickly the world's media forget such issues and move on to other things. This hurricane killed more people than any other hurricane in the western world in the past 200 years since records started. However, I was interested to discover that it was not the fiercest hurricane this century but ranks fourth in the league tables.

What made this hurricane so catastrophic and lethal was the fact that it was super-saturated. It has been calculated that the hurricane, which picked up evaporated water over the oceans, dropped 40 cubic kilometres of water—a quite horrendous amount of water—over Honduras, Nicaragua and parts of El Salvador over a period of two days. That was on top of the unusual amount of water that had already saturated the landscape and caused flooding. That was one of the reasons for so many landslides and the resulting savagery of the flooding.

Hurricane Mitch literally redrew the map, especially of Honduras. A project has been undertaken to withdraw the map of Honduras because whole towns and villages were either buried in silt or washed away. Even the coastline has changed. Rivers have altered course and a number of bridges and countless roads were disrupted by the numerous landslides.

The economic devastation was quantified by the noble Lord, Lord St. John of Bletso. The sector which was hardest hit was agriculture. That was not only because of the destruction of crops but also because of the unfortunate after-effect of flooding in which the agricultural land was buried under as much as two to three feet of sandy silt. I have seen pictures of fields being reclaimed. The only way to do that is to dig the silt off. That work is being undertaken by some of the larger companies, such as Chiquita, but that is of little help to many of the smaller farmers, who will find it extremely difficult to reclaim their land.

One of the crops which were hardest hit was bananas. I quote an interesting fact I heard recently, which may help in the WTO negotiations; namely, that bananas are not a fruit but the largest herb in the world. I thought I would throw that in, because it tickled me!

The economic devastation meant that reconstruction was needed. Looking back on the previous debate. I find it strange that we talked about debt relief as the most important thing. It shows how slanted our view of economic growth is that we do not talk about new money going into the area for rebuilding or reconstruction; we immediately look at how much the developing world owes us rather than at what 'we can give to it.

I had a number of questions which I wished to probe further, but my guns were spiked by a letter passed to me by the noble Lord, Lord Rea, written by the noble Baroness, Lady Amos, which set out Britain's contribution. For the sake of time, I shall not look at that issue again, but I should like to ask the noble Baroness whether she has any further information to add on Britain's contribution to debt relief.

The reconstruction in Central America and Latin America will owe much to one simple expedient; namely, the success of the Caribbean Basin Initiative. One of the problems that Central America faces is the trade barriers imposed by the United States on Central American goods. One way of kick-starting those economies after Hurricane Mitch could be to remove some of those trade barriers. That point could perhaps be brought to the attention of the Americans.

This debate is well-timed. I believe that on the 15th of this month the IMF signed an agreement with Honduras for a structural adjustment programme which will start the process of debt remission.

I should like to end by asking the noble Baroness a question about schemes relating to the environment. Hurricane Mitch was one of an increasing number of storms, which will hit again. Has the Minister any examples of schemes that the DfID is undertaking to reduce the effects of these storms. I read an account of work which had been undertaken at San Pedro, the second largest city in Honduras. Because of the work, that city managed to avoid much of the devastation. Without such work, the next hurricane will cause the same amount of humanitarian disaster as that caused by Hurricane Mitch.

8.18 p.m.

Lord Moynihan

The noble Baroness, Lady Richardson of Calow, sought our indulgence for an additional few weeks. She need have made no such request. Her eloquence, clarity of thought and sensitivity to the crisis in Central America made her maiden speech memorable. I am sure that it is those of us who participate in aid and development debates in this House who will be seeking her indulgence in the future. From these Benches, we offer her a warm welcome and our congratulations. I also thank my noble friend Lord Montgomery of Alamein for tabling this Question. This House last had the occasion to debate the situation in Central America in the immediate aftermath of Hurricane Mitch in December, once again as a direct result of my noble friend's abiding interest in and commitment to the region.

With the initial phase of search and rescue, the urgent delivery of millions of pounds of water, food, medicine, plastic sheeting and clothing to the thousands who lost everything in the hurricane now completed, it is critical that, as the international community seeks to direct its strategy and resources from the relief phase to the process of long-term reconstruction, compassion fatigue is not allowed to set in.

I take this opportunity once again to pay tribute to the non-governmental organisations which brought immediate emergency relief to the affected communities in the form of food, medicine and shelter, and to those still on the ground, where their efforts will be necessary for many years to come.

It is true that destruction breeds desperation, which in its turn can be the nurturer of crime and conflict. The international community therefore has far more than a passing interest in ensuring a region of strong, stable and prosperous democracies as a partner for trade and investment and in combating common problems, such as drug trafficking, corruption, illegal immigration and environmental degradation. It is in no one's interest if trade is allowed to contract, co-operation is allowed to lapse and a fertile environment is created so that crime, corruption and drug trafficking fill the vacuum left by the storm.

On that note, what action are the Government taking to assist the governments of Central America to ensure that Hurricane Mitch leaves one positive legacy to the people of the region by helping them to reinforce their renewed commitment to democracy, transparency and continuing reform? It is only in this way that the governments of Honduras and Nicaragua in particular will be empowered to grasp this opportunity from out of the jaws of adversity and not only rebuild but transform their institutions both politically and economically.

This evening's debate provides a key opportunity for the Minister to set out the assessment of the Department for International Development of the long-term rehabilitation and reconstruction needs of the countries of Central America affected by Hurricane Mitch. What information can the Minister give the House on the DfID mission referred to earlier? The mission was due to visit Honduras and Nicaragua on 22nd February to look at possible long-term assistance and check on progress of the work being done as a result of Britain's £4.2 billion package, including work to rebuild roads and bridges, repair water and sanitation infrastructure and restore primary health and education services. The extent of work on epidemic control was also to be assessed.

The widespread loss of jobs is of particular concern in relation to the attempts to reactivate the region's economy. Does the Minister agree that the ability of the economies of this region both to restore jobs and to create new ones is vitally important? It must not be forgotten that more than 50 per cent of the population of Central America is under the age of 20.

In the Minister's view, what are the significant lessons on how better to co-ordinate international aid efforts that the Government have learnt from the tragedy? When will these lessons be implemented as a result of the review of the disaster preparedness programme that the department is considering? What specific elements to date have been included as part of the international recovery programme for Central American countries in order to help them improve their ability to withstand future disasters? The last point is particularly relevant and has been referred to by a number of noble Lords, not least given the predictions of Dr. Willoughby of the National Hurricane Center in Miami, which were referred to in the debate in December, that the conditions which brought about Hurricane Mitch could prevail again this year?

Does the Minister agree that the approach of the 1999 rainy season in Central America and the Caribbean poses enormous risks for the region? Is the international community now better able to respond in a more co-ordinated way? Without going into detail on debt relief—it has been well covered by many noble Lords who have spoken this evening—we on these Benches also welcome the Government's push for a stronger link between debt relief and poverty eradication as pledged by the Secretary of State, not least to be discussed this week as part of the IMF and World Bank 1999 spring meetings. Perhaps the Minister is in a position to report on progress achieved so far, for we must take the opportunity this week in Washington to ensure that debt relief is used more effectively as a tool of international development—debt development swaps are but one example—so that linkage really benefits governments who adopt policies that help the poor.

In conclusion, Hurricane Mitch took the lives of thousands of victims. We cannot allow it to take the future of the survivors as well. We cannot allow the fury of the storm to erode not just the topsoil in the region's flooded fields but the very fabric of society and its consolidation of democracy. We cannot allow the economies of the region to be undermined, for, if the international community fails to respond to this crisis in both the short and long term now that the television cameras have gone, these countries will be condemned to years of poverty and misery with massive setbacks to their social and democratic development. We shall all he the poorer if that is the lasting legacy of Hurricane Mitch.

8.26 p.m.

Baroness Amos

My Lords, I begin by thanking the noble Viscount, Lord Montgomery of Alamein, for again bringing to the attention of the House the plight of those affected by Hurricane Mitch. I also thank the noble Viscount for his support of the work of DfID. I also pay tribute to the noble Baroness, Lady Richardson of Calow, for a notable maiden speech. I look forward to her contributions in the future.

Hurricane Mitch may no longer be in the nation's headlines, but that does not mean that the people of Central America are no longer suffering from the mass destruction which was caused during that dreadful time. The UK has been active in offering support to those affected by the disaster. I can announce today that my honourable friend the Parliamentary Under-Secretary of State for International Development will be visiting Honduras and Nicaragua in July to see the reconstruction process for himself.

In the immediate aftermath of Hurricane Mitch there was an overwhelming need to provide humanitarian assistance. The Department for International Development responded to requests from carefully chosen organisations already in the country at the outset of the disaster. During the initial response a number of individual grants were given to NGOs and international organisations. I support the comments of the noble Lord, Lord Moynihan, who paid tribute to the work of NGOs.

A team from DfID visited the region earlier this year to assess the work that was being done with support from the UK Government. I should like to share with noble Lords the fact that DfID was praised from ministerial level down not only for the speed and appropriateness of its initial response but for the focus and level of its humanitarian assistance package. The speed with which the Royal Navy sprang into action was also rightly highlighted.

Noble Lords will be pleased to know that government Ministers in all the affected countries are currently preparing a portfolio of projects for a donors meeting in Stockholm scheduled for 25th to 28th May. It is encouraging that the proposals being prepared for Stockholm are oriented towards reconstruction and reducing vulnerability to future disasters rather than just patching up.

The noble Viscount referred to steps to facilitate economic recovery. The noble Viscount will agree with me that the economic aspect of recovery cannot be divorced from other aspects of human development. A strong economy depends on the strength of its component parts, including areas such as housing, infrastructure, health and education. It was in these areas that Britain opted to provide assistance in the transitional phase.

Our programme to rebuild rural roads and bridges is a good example of a simple project helping to regenerate the economy. Many areas in rural Honduras have been virtually cut off since the hurricane, in many cases accessible only by donkey. Children in some areas were unable to get to school and doctors had difficulty in reaching patients. The local economy came to something of a standstill, as normal trade was next to impossible. Opening up access by repairing the road system and making the bridges passable again means that life can get back to something like normal. The project is also an income generator, as it employs local people, at least 20 per cent of whom are women, in groups of 30 at up to five locations on each road.

The noble Lord, Lord St. John of Bletso, mentioned the need for housing. In Honduras, DfID has been funding housing and micro credit schemes run by CARE International. The housing project will provide the materials for the basic houses, which will be constructed by families in groups of 10.

The micro credit project reflects the loss of a significant proportion of the pre-Mitch capital used by the poorest sector of the Honduran population, both urban and rural, to buy, sell, trade, and for general income. In order to reactivate household economies and jump-start the informal sector, CARE is making available small loans of between 75 US dollars and 150 US dollars per household. Working through community and solidarity groups, 3,000 families—that. is, about 15,000 people—will benefit directly from this initiative.

It is important that the reconstruction process is carried out in such a way that any hurricane of the future does not cause such massive destruction. That is why one of the studies we funded in the early days was for an organisation set up by the Central American presidents to advise on the best methods for reconstructing the countries to ensure they are better placed to survive in similar circumstances in the future. We are now considering further help for work on preparedness at a local level.

Several noble Lords, including the noble Lord, Lord Redesdale, mentioned agriculture. In addition to an emergency seed-planting programme in the weeks immediately after the hurricane, we have recently agreed a programme to help to regenerate agriculture in Honduras. The focus here is on putting local seed systems on a strong footing for the future and for assisting efforts at rehabilitating soil, which is now viewed as potentially more serious and threatening to the long-term viability of the food system than seed supply.

In Nicaragua DfID is supporting UNICEF's emergency programme to repair water and sanitation infrastructure and to restore primary health and education services for disaster-affected communities.

The noble Lord, Lord Moynihan, asked about epidemic control. The health project is aimed at preventing and controlling any outbreak of cholera or other transmissible diseases, particularly those affecting children. Given the importance of this sector, we hope to do more in the long-term reconstruction phase. We have just completed preliminary discussions with the pan-American Health Organisation and others on further work in areas such as disease prevention.

In education we have helped rehabilitate schools, given students back-packs and materials, equipped classrooms with desks and tables, and supplied schools with textbooks, maps, encyclopaedias and dictionaries.

Overall we plan to spend some £6 million in the region over the next two years on measures to help with long-term reconstruction, as well as the £3.2 million already spent.

In addition to those measures, we have also taken a number of steps on the debt front. I agree with the noble Baroness, Lady Richardson, that reconstruction and rehabilitation will take longer than two years. Nicaragua and Honduras have both received assistance with their current debt burdens, with bilateral governments agreeing to forgo debt payments for two years and donors helping these countries to meet their multilateral debt payments. Both Nicaragua and Honduras are classified as heavily indebted poor countries (HIPCs) and will be considered for debt relief under the HIPC initiative. A debt sustainability analysis will be done on those countries this year to decide the level of assistance for which they qualify.

The right reverend Prelate the Bishop of Blackburn spoke powerfully of the need to resolve the debt burden facing the region. A comprehensive review of HIPC is currently under way. I can assure noble Lords that we are pressing for revisions to HIPC so that it provides countries with a permanent exit from their debt problems, as it was designed to do, and so that sufficient resources are released early on by lower debt service payments to allow countries to tackle poverty more effectively.

The noble Lord, Lord St. John of Bletso, asked me about the trust fund. The UK Government proposed a trust fund to help Honduras and Nicaragua to meet their multilateral debt service payments and have contributed £10 million, now that the World Bank has taken up our suggestion. Total commitments to the fund now exceed 100 million dollars.

The noble Lord, Lord Redesdale, also mentioned the need for long-term investment. The Commonwealth Development Corporation has become increasingly involved in the region. The value of the programmes in the Mitch-affected regions has grown from £23.7 million in 1993 to £72.4 million in 1998.

We are currently looking at a number of options for continuing our work in the long term. These include work in reproductive health and disease surveillance, working alongside the United Nations Population Fund and the pan-American Health Organisation.

In mid May we will begin discussions with the regional technical assistance unit for agriculture which provides policy support to ministries of agriculture, natural resources and environment in seven countries of the region, and assist in preparation of investment proposals for funding by the World Bank and others.

This reflects our long-term strategy for the region, which is to work alongside the multilateral organisations in order to give added value to their programmes and ensure that British influence is well felt.

The first example of this co-operation is a capacity-building fund for Central America which was signed in February with the Inter-American Development Bank. This is intended to strengthen the ability of local groups to run their affairs more effectively. It will be aimed specifically at the poorer sectors of society and particularly at those whose lives have been disrupted by Hurricane Mitch.

I would like to touch on three specific points raised in the debate, and I will write to other noble Lords whose points I have been unable to cover. The noble Baroness, Lady Richardson, mentioned the gift aid scheme. The scheme applies to British charities working overseas and I see no reason why it should not apply to Central America.

My noble friend Lord Desai mentioned the Asian social fund and the need to establish a fund for Central America. I assure the noble Lord that the consultative group process has brought together the donors in a very similar way.

I make only one comment on bananas, be they fruit or herb: in all the discussions we have made it clear that the UK is looking for a solution which is clearly WTO compatible, does not run the risk of WTO challenge and meets our responsibilities to the ACP suppliers.

It is not possible to underplay the horrors that face the people of Central America, yet they have responded magnificently. With the help of the international community much of life is getting back to normal, or as normal as it can be. Houses are being built and roads repaired; children are back in school and hospitals are functioning again. There is still an enormous amount to be done. Noble Lords can be assured that Britain will play its part alongside others in the process of recovery.